According to a lawsuit filed just after Thanksgiving, fast food giant McDonald’s is suing a group of pork industry producers, claiming that price fixing was taking place. The suit addresses alleged fixed pork prices over about 14 years, beginning in or around 2008 to 2009, to fix, raise, maintain, and stabilize the price of pork.
McDonald’s alleges it paid artificially inflated prices for pork during the relevant period.
“Such prices exceeded the amount they would have paid if the pork price had been determined by a competitive market, without defendants’ anticompetitive behavior,” said the complaint, which was filed in the federal court in the Eastern District of New York. “Thus, plaintiff suffered injury and damages due to defendants’ anticompetitive conduct.”
Calling the pork industry highly concentrated with a small number of producers, the suit details that the defendants and accused co-conspirators control over 80 percent of the wholesale pork market. Defendants include Agri Stats, Clements Food Group, Hormel Food Group, JBS USA, Seaboard Foods, Smithfield Foods, Triumph Foods, and Tyson Foods, Tyson Prepared Foods, and Tyson Fresh Meats.
How did they do it? McDonalds says that the defendants implemented their conspiracy by agreeing with their competitors to restrict output and limit production to increase and stabilize U.S. pork prices. McDonald’s serves sausage, bacon, and ham on its breakfast menu, and for a period during the lawsuit’s timeframe, McDonald’s featured all-day breakfast.
With the help of Agri Stats, a Fort Wayne, Indiana-based agriculture data and analysis company, McDonald’s alleges that the defendants exchanged detailed, competitively-sensitive, non-public information about prices, capacity, sales volume, and pork industry demands. According to court documents, this began in 2008 when Greg Bilbery of Agri Stats wrote in the Pork Production Journal that, “Benchmarking in the swine industry could range from simple production comparisons to elaborate and sophisticated total production and financial comparisons. Each and every commercial swine operation is encouraged to participate in some benchmarking efforts.”
Further, Agri Stats is accused of emphasizing the goal of increasing profitability over production, “We must remember that the ultimate goal is increasing profitability — not always increasing the level of production.”
Agri Stats is accused further of informing the pork industry that, “Each swine production company should be participating in some type of benchmarking. To gain maximum benefit, production, cost and financial performance should all be part of the benchmarking program.”
McDonald’s has cited alleged violations of Sections 4 and 16 of the Clayton Antitrust Act of 1914, seeking a jury trial and mitigations for damages including treble damages, that allow the court to triple the amount of actual damages awarded to a plaintiff.